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Home buyer lending rises as affordability worsens

  • 23/08/2017
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Home buyer lending rises as affordability worsens
Home buyer lending increased across much of the UK during the second quarter of the year, but affordability worsened, especially for first-time buyers.

In contrast, remortgage activity was down across London, Scotland and Wales during the period.

Lending to home buyers was up in London (11%), Scotland (35%), Wales (26%) and Northern Ireland (17%) compared to the first three months of the year, according to UK Finance.

The differences were also substantial when compared to the second quarter of last year – up 17%, 18%, 19% and 24% respectively.

Encouragingly, first-time buyer activity was up too, with more loans being taken out across all these regions, however, affordability also worsened for first-timers.


Best in a decade

Signs emerged that the home moving market was beginning to grow, with more home buyers in Scotland in the second quarter of 2017 than any other quarter since 2007.

House purchase lending in Northern Ireland also reached its highest second quarter level since 2007, with first-time buyers driving that growth, out-borrowing home movers since 2010.

UK Finance head of mortgages Paul Smee noted that home buying in the capital had bounced back from the traditionally subdued beginning of the year.

“The housing market in Greater London has some unique characteristics compared to the rest of the UK – more first-time buyers, but lower overall levels of home-ownership,” he said.

“Affordability and the supply of housing remain critical factors to manage for the London market if positive activity is to continue going forward.”

E.surv director Richard Sexton echoed these views on a national scale, adding: “Although buyers do not make the decision on where to live based on the chances of their mortgage being approved, these significant regional differences have an effect on first time buyers.

“To ensure a more fluid housing market across the country, the government must fulfill its promises and addresses the lack of accessible housing throughout the country.”


Affordability in London was particularly stretched for first-time buyers, who typically borrowed £268,100 (compared to £137,700 in the UK overall, up from £254,800 in Q1), with average household income of £66,900 (£40,800 in the UK overall, up from £64,300).

All this meant the typical income multiple in London rose to 4.02 (up from 4.00 in Q1) compared to the UK average of 3.58.

Similar trends were seen in London home movers with this income multiple rising to 4.01 (up from 3.96) and much higher than the UK average of 3.37.

Home nations

Property is generally more affordable than the UK average in Scotland, Wales and Northern Ireland, however it is still becoming more of a strain in these areas, with first-time buyers again hardest hit.

First-time buyers in Scotland typically borrowed £101,600 (up from £98,230 in Q1) on an average household income of £33,600 (down from £33,700). As a result, their typical income multiple was 3.09 (up from 3.01 in Q1).

The typical home mover income multiple in Scotland was 2.84 (up from 2.83).

Wales remained the least affordable of the home nations according to the UK Finance data, although the typical income multiple remained unchanged for first-timers at 3.31.

They typically borrowed £109,300 (up from £106,200 in Q1) on an average household income of £34,100 (up from £33,000).

For home movers, the income multiple increased to 3.00 (from 2.9).

Northern Ireland remained the most affordable of these areas in which to buy a property and home movers actually saw it become more affordable – the only cohort in the data to see this change.

First-time buyers typically borrowed £96,900 (up from £95,000 in Q1) on average household income of £32,200 (up from £32,000).

As a result, the typical income multiple for first-timers in Northern Ireland rose to 2.94 (from 2.92).

In contrast, the typical home mover income multiple in Northern Ireland was 2.57, (down from 2.59).

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